Banco de Chile(BCH) - 2021 Q2 - Quarterly Report

Financial Performance - Net income for the period was MCh$ 324,869 in June 2021, down from MCh$ 463,108 in December 2020, representing a decrease of 29.87%[6] - Net income for the period increased to MCh$ 324,869 in June 2021, up from MCh$ 248,585 in June 2020, representing a growth of 30.7%[8] - The income for the period in 2021 was MCh$ 324,869, compared to MCh$ 248,585 for the same period in 2020, indicating a year-over-year growth of approximately 30.7%[10] - The company reported a net income of MCh$ 324,869 for the period, an increase of 30.7% compared to MCh$ 248,585 in 2020[11] - Income before income taxes increased to MCh$ 406,146 in June 2021, compared to MCh$ 311,883 in June 2020, representing a growth of 30.1%[71] Assets and Liabilities - Total assets increased to MCh$ 47,316,246 as of June 2021, up from MCh$ 46,095,131 in December 2020, representing a growth of 2.64%[6] - Total liabilities reached MCh$ 43,382,729 in June 2021, compared to MCh$ 42,368,863 in December 2020, indicating an increase of 2.39%[6] - Cash and cash equivalents at the end of the period stood at MCh$ 5,106,015, a decrease from MCh$ 5,776,595 in the previous year[11] - Total cash flows from operating activities were negative at MCh$ 678,766, worsening from a negative MCh$ 435,486 in the previous year[11] - Total cash flows from financing activities were positive at MCh$ 1,142,123, down from MCh$ 2,443,277 in 2020[11] Loans and Provisions - Loans to customers, net, rose to MCh$ 31,577,277 in June 2021, compared to MCh$ 30,190,058 in December 2020, reflecting an increase of 4.59%[6] - Provisions for loan losses significantly decreased to MCh$ 130,871 from MCh$ 264,968, a reduction of 50.7%[7] - The bank's provisions for loans and accounts receivable from customers decreased to MCh$ 73,154 from MCh$ 200,387 in the previous year[11] - The total credit risk provisions as of June 30, 2021, stood at MCh$ 687,469, a decrease from MCh$ 746,910 as of December 31, 2020, reflecting improved asset quality[119] Equity and Retained Earnings - The bank's equity attributable to owners increased to MCh$ 3,933,516 in June 2021 from MCh$ 3,726,267 in December 2020, a growth of 5.57%[6] - Retained earnings from previous years increased to MCh$ 655,478 in June 2021, compared to MCh$ 412,641 in December 2020, showing a growth of 58.83%[6] - The total equity of the bank reached MCh$ 3,933,517 in June 2021, up from MCh$ 3,726,268 in December 2020, indicating an increase of 5.57%[6] Operating Revenues and Expenses - Total operating revenues decreased to MCh$ 981,043 from MCh$ 1,017,102, a decline of 3.5%[7] - The bank's total operating expenses remained relatively stable at MCh$ 441,840, compared to MCh$ 441,826 in the previous year[7] - Net interest income remained stable at MCh$ 674,274, slightly up from MCh$ 673,895 year-over-year[7] - Administrative expenses decreased to MCh$ (171,978) in June 2021 from MCh$ (181,663) in June 2020, a reduction of 5.5%[71] Cash Flow and Investments - Cash flows from investing activities also saw a significant decline, totaling negative MCh$ 1,515,794 compared to negative MCh$ 277,030 in 2020[11] - The total cash flow for lease liabilities during the period was MCh$ 132,130, with payments of capital and interest totaling MCh$ 13,852[167] - The total amount of commercial lease transactions was MCh$ 1,581,759, with net assets of MCh$ 1,569,602[110] Regulatory Compliance and Accounting Standards - Banco de Chile continues to operate under the supervision of the Chilean Commission for the Financial Market and the SEC, maintaining compliance with international financial reporting standards[13] - The bank has adopted new accounting standards including IFRS 9, IFRS 7, and IFRS 16, which are effective for annual reporting periods beginning on or after January 1, 2021[28] - The implementation of Basel III standards in Chile was postponed until December 2021, maintaining the existing regulatory framework for banking capital requirements[47] Market and Economic Conditions - The government announced fiscal transfers equivalent to 9 points of GDP to support economic recovery amid the COVID-19 pandemic[60] - As of the date of the financial statements, over 78% of the target population in Chile has completed their vaccination process against COVID-19[60] Segment Performance - The Bank's retail segment focuses on individuals and SMEs with annual sales up to UF 70,000, offering consumer loans, commercial loans, and credit cards[66] - The wholesale segment targets corporate clients with annual revenues exceeding UF 70,000, providing services like liquidity management and debt instruments[66] - The Treasury segment manages the investment portfolio and financial transactions, including foreign exchange and derivatives[66] Derivatives and Hedging - The total notional amount of derivatives held for hedging purposes is MCh$ 6,100, with liabilities valued at MCh$ 1,714[88] - The total cash flow hedges for bonds issued abroad amount to MCh$ 1,217,457, with liabilities of MCh$ 65,172[90] - The unrealized results from derivative contracts in the cash flow hedging strategy amounted to a credit to equity of Ch$82,373 million for the period 2021[102] Future Outlook - The company aims to maintain a balanced debt profile while optimizing interest expenses through strategic refinancing[198] - Future bond issuances are expected to focus on favorable market conditions to minimize costs[198] - The company is exploring new market opportunities to enhance its growth trajectory and financial stability[198]